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61 Oil and Gas Producing Regions Still Disappointed


    A total of 61 local governments still have to be disappointed because regulations are not strong enough to involve oil and gas producing regions in obtaining a 10% participating interest.

Blogger Agus Purnomo in SKK Migas

    Head of the Legal Division of the Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) Didik Setyadi said that until November 2021 there were still 61 regions that were carrying out the 10% Participating Interest (PI) bidding process.

    According to Didik, one challenge that makes it difficult for regions to get a 10 percent PI is caused by regulations that do not explicitly regulate sanctions for contractors who do not meet the provisions of the Minister of Energy and Mineral Resources Regulation number 37 of 2016.

"This needs attention because the nature of the business to include a 10 percent PI is good faith is cooperation, so cooperation cannot be forced on each other but must be an agreement based on both parties," he said in the Northern Sumatra Forum webinar, Thursday ( 25/11/2021).

    Didik added that the difficulty of investing in regional shares of 10 percent was also caused by the reluctance of contractors who thought it would affect the economy.

    The reason is that the Minister of Energy and Mineral Resources Regulation number 37 of 2016 is interpreted by oil and gas contractors to provide 10 percent PI shares with a maximum value so that it will have an impact on the project's economy.

    The Coordinator of the Upstream Oil and Gas Business Development Assessment of the Ministry of Energy and Mineral Resources, Yulianto, said the government would immediately revise the Minister of Energy and Mineral Resources Regulation number 37 of 2016 to make it easier for regions to get a 10 percent PI.

    The plan to revise the regulation is necessary considering that since the enactment of the Ministerial Regulation, only two regions have received a 10 percent PI, namely West Java and East Kalimantan.

"We at the Ministry of Energy and Mineral Resources have then tried, in this case, trying to improve the Ministerial Regulation in order to improve the process of bidding and transferring PI more so that it is faster and more transparent, then it can really be accepted by fellow contractors and in producing areas," he explained.

    Meanwhile, the government will revise the definition of PI with a maximum percentage of 10 percent and regulate the distribution of shares of 10 percent for districts/cities and provinces. Improvements will also be made to the obligations of Regional Owned Enterprises (BUMD) in terms of the value of the transfer, the appointment of an independent institution.

    In addition, the government will regulate the timing of the 10 percent PI offer, the effective date for the 10 percent PI, and sanctions for Cooperation Contract Contractors (KKKS) who do not offer a 10 percent PI.

the Rokan Block

    Meanwhile, Riau Governor Syamsuar said the process to get a 10% PI in the Rokan Block had gone through 9 of the 10 stages specified in the Minister of Energy and Mineral Resources Regulation No. 37/2016.

    He said that his party had reached an agreement between the five regents who were included as oil and gas producing regions from the Rokan Block and had appointed Regional Owned Enterprises (BUMD) to be included in the 10% PI.

West Java Governor Ridwan Kamil


    Meanwhile, West Java Governor Ridwan Kamil explained that there are still many areas that have not been involved in managing oil and gas working areas. This is because there are still contractors who find it difficult to cooperate with regional companies.

    Ridwan Kamil, who also serves as Chairman of the Association of Regional Oil and Gas Producers and Renewable Energy (ADPMET) said that getting PI is not as easy as it is in the applicable legislation. According to him, special lobbying is needed by the regions together with contractors.

“Everywhere, it is difficult for people to share profits, so that's the nature. That is why the success of West Java Province and East Kalimantan Province because of incentive lobbying, should not be as complicated and not as tiring,” he said.

    Ridwan Kamil added that another obstacle that is often found in oil and gas producing areas to get a 10% PI is the non-transparent lifting data from contractors. For this reason, cooperation with the central government is needed so that the regulations provided can be easier and provide transparency of the potential generated from an oil and gas working area.

"Therefore, we offer our organization to provide lobbying for the central government to make it easier," he said.

    According to him, as an area that has managed to get a 10% PI, West Java has felt the direct benefits generated both in terms of income and the multiplier effect.


    Ridwan Kamil explained that West Java had succeeded in obtaining business income through the regionally owned company (BUMD) PT Migas Hulu Jabar which managed the 10% PI in the ONWJ Block worth Rp 232 billion during 2017-2018.

PHE-ONWJ Block in West Java

    President Director of PT Migas Hulu Jabar Begin Troys said that in 2019, his party began to enter the electricity business, integrated energy management, gas infrastructure, and construction services in the oil and gas sector.

    As a result, in 2019 West Java's Upstream Oil and Gas earned revenue of Rp 172 billion with income from non-PI 10% increasing to 16%. In 2020, West Java's upstream oil and gas will enter the Pertamina Group's DRUPS business, manufacturing oil and gas block rigs, and the Cirompang micro-hydropower plant.

Bisnis Indonesia, Page-4, Friday, Nov 26, 2021


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